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A Pennsylvania appeals court on Thursday issued a split decision on the state’‍s oil and gas law, rejecting some challenges to the 2012 update to the drilling rules but affirming the rights of municipalities to regulate the location of oil and gas development.

The Commonwealth Court confirmed that state regulators can be required to notify public water suppliers but not private water well owners of drilling-related spills.

It also upheld the law’‍s limits on what doctors can disclose about proprietary chemicals used in the gas extraction process and its endorsement of public utilities’ ability to use eminent domain to take property for gas storage facilities.

The court rejected the state’‍s argument that the Public Utility Commission still has the authority to judge municipal ordinances that regulate oil and gas development after the state Supreme Court ruled in December that the law, known as Act 13, unconstitutionally limited local governments’ right to say where well sites, compressor stations and other oil and gas facilities can be located.

The state argued that the commission still had an essential role in reviewing ordinances, hearing challenges and determining if local governments are eligible to receive their share of impact fees distributed to communities that play host to drilling operations, but the court found that since the uniform zoning provisions of the law were thrown out, the law’s special system for reviewing ordinances must also fall.

The ruling reaffirms that municipalities can regulate locations but not the details of drilling operations that the state Department of Environmental Protection already regulate.

“Local zoning matters will now be determined by the procedures set forth under the [Municipalities Planning Code] and challenges to local ordinances that carry out a municipality’s constitutional environmental obligations,” President Judge Dan Pellegrini wrote in the opinion, which judges Bonnie Brigance Leadbetter and Robert Simpson joined.

Judges P. Kevin Brobson and Patricia A. McCullough wrote separate opinions that partially agreed and dissented from the majority opinion.

John Smith, one of the attorneys who argued the case and the solicitor for Cecil and Peters townships, said while the decision was split for his clients on the different parts of Act 13, the rights of municipalities to regulate where oil and gas development is located was protected.

He said the decision removes the municipalities’ concerns that they could be made to pay legal costs or have their impact fees withheld for enacting ordinances controlling development.

“Peters Township is in the process of rewriting its oil and gas regulations, and the court said it absolutely doesn’t have to worry about paying legal fees,” Mr. Smith said. “The municipalities ... should just do what they feel is legal and correct and not worry about paying the corporate legal fees.”

A spokesman for the governor’s office of general counsel said attorneys are still evaluating the impact of the court’‍s ruling, but he praised the court’s decision on the other remaining issues.‍

Travis Windle, a spokesman for the Marcellus Shale Coalition, which joined with other oil and gas trade associations as friends of the court in the case, said, “Pennsylvania’s natural gas industry will continue to work collaboratively with the communities in which we operate to ensure shale development moves forward, and we continue to realize the benefits at the local level and statewide.”

The challengers include municipalities, local officials, environmental groups and a doctor, although the first named party in the case, Robinson Township, withdrew from the case in April.

Brian Coppola, the lead individual bringing the case and a former Robinson Township supervisor, called the decision “a victory for townships and the people of Pennsylvania.”

“I'm very pleased with the ruling that eliminates the PUC’s role in reviewing local ordinances and its ability to withhold impact fee money from municipalities like Robinson, Cecil and Mount Pleasant that regulated shale gas development.”

All three of those municipalities were part of the original lawsuit challenging Act 13, and the PUC was scheduled to review their local drilling ordinances and possibly eliminate their impact fee payments, Mr. Coppola said.

The judges in the majority said that even though the Department of Environmental Protection is not required to alert private water well owners of a spill, DEP will “in all likelihood” help them to get alternative water supplies.

“Just as there is no affirmative requirement to notify individuals of an oncoming flood or fire, public entities as of course notify those in the path of danger,” Judge Pellegrini wrote.

Although the court upheld Act 13’s limits on what doctors can reveal about confidential chemical information that is shared with them in the course of treating a patient, an attorney for the challengers said the court’‍s reading of the law “alleviates the bulk of our concerns.”

“As the court interpreted the statute, doctors are not precluded from telling patients or other doctors the chemicals the patient may have been exposed to from drilling operations because the oil and gas industry deems the chemicals proprietary or a trade secret,” Mr. Smith said.

The judges in the majority wrote that nothing in the law precludes a doctor from including the information “in patient records, medical treatment or evaluations” or from sharing it with other doctors involved with a patient’s treatment or diagnosis.

In her partial dissent, Judge McCullough criticized the law’‍s restrictions on medical professionals.

“The statute has the effect of severely curtailing the medical community’‍s ability to share and discuss solutions concerning chemical toxicity cases and symptomatic presentations that they may never have encountered,” she wrote. “At the very least, the confidentiality agreement should allow open and frank communication throughout the medical community.”

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